Jeff Bezos' Master Plan for His Newspaper

The Washington Post will be giving away digital subscriptions to other newspapers. This is just the first step for the newspaper's future.

Mar 31, 2014 at 6:00PM

When Amazon.com (NASDAQ:AMZN) CEO Jeff Bezos announced he would purchase The Washington Post last August, many puzzled over the decision longer than a Saturday crossword. Who buys a newspaper in this day and age (except Warren Buffett)? What does Bezos know about newspapers? Will The Washington Post just turn into a Kindle-accessible e-newspaper?

Finally, some answers can be divined from the paper's latest strategic decision: It will offer free digital subscriptions to subscribers of other papers across the U.S. This means subscribers to The Dallas Morning NewsHonolulu Star-Advertiser, The Toledo Blade, Minneapolis Star Tribune, Pittsburgh Post-Gazette, and the Milwaukee Journal Sentinel will be able to access the Post's digital content.

And while Bezos' future plans are truly only known to him, this could be the first step in a future path turning his newspaper into the Amazon.com of its industry. That is, a formidable force based on long-term thinking and shrewd tactics.

Lessons from Amazon.com
Amazon.com was first an underdog, selling only books versus established giants. However, it was a first-mover in terms of selling through the Internet, and then broadening its market with other products, and then becoming a marketplace through which it didn't even have to sell anything itself, but just allow others to transact through its website.

The Washington Post is in a similar underdog position. According to the Alliance for Audited Media, there are six papers ahead of Bezos' in terms of average circulation:

Newspaper Print Circulation Digital Circulation Owner
Wall Street Journal 1,480,725 898,102   News Corp. 
New York Times  731,395  1,133,923   The New York Times Company (NYSE:NYT)
USA TODAY  1,424,406  249,900   Gannett (NYSE:GCI)
Los Angeles Times  432,873 177,720   Tribune
New York Daily News  360,459  155,706   Daily News, LP
New York Post 299,950  200,571   News Corp.
Washington Post  431,149  42,313   Nash Holdings, LLC

Source: Alliance for Audited Media, April 30, 2013.

And, more importantly, the Post is behind in terms of digital circulation -- arguably the future for any news service as readers turn to mobile devices.

But, the Post doesn't have an inherent advantage, like being one of the first e-commerce websites. So, Bezos has to create some.

A strategy of free
How do you quickly build an audience or customer base? Offer things for free! Amazon Prime, while sold with the value of free two-day shipping, includes access to free media on Amazon Instant and the Kindle Owners Lending Library. While butting heads with Netflix would have been a tough slog if sold on its own, by pairing Amazon Instant with a service already deemed valuable, it could shoehorn its way into a customer's life. 

So, the Post will employ a similar strategy to bump its digital readers. Users already pay for their local paper, and now they might enjoy and make the Post's potentially more comprehensive national and international online content a part of their routine -- at no extra cost. And, the Financial Times reports that a free digital subscription to the Post could also be added to Amazon Prime, or even digital music service Spotify.

And beyond
Looking farther into the future, the Post could leverage these relationships with local papers to allow for even more integrated partnerships: Imagine a news source that would provide knowledgeable, local coverage with Pulitzer Prize-winning world news. While this would require separate publications in print form, with digital formats that can blur and combine the sources, it's easily achievable. A reader of the Minneapolis Star Tribune wouldn't have to visit both the Star Tribune's website and the Post's anymore, but just one site where good content would be fairly guaranteed.

And that is very similar to the way in which customers flock to Amazon.com, knowing that someone will likely sell whatever they are looking for, and that it's likely been vetted for quality.

One of Amazon.com's values is customer focus, and while the lines between a reader and a customer are fuzzy, just as they can be between a newspaper and a business, it could be a winning long-term tactic for the future of news.

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Dan Newman has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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